SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ࠚ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 OR □ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to Commission File Number 1-6887 PACIFIC CENTURY FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 99-0148992 (State of incorporation) (IRS Employer Identification No.) 130 Merchant Street, Honolulu, Hawaii 96813 (Address of principal executive offices) (Zip Code) (808) 537-8430 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Each Class on Which Registered Common Stock, $.01 Par Value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ࠚ No □ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ࠚ The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing price of said stock on the New York Stock Exchange on December 31, 2000 ($17.69 per share): $1,342,852,104 As of February 28, 2001, 79,755,758 shares of Common Stock, $.01 par value, of the registrant were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement relating to the Annual Meeting of Shareholders to be held April 27, 2001, are incorporated by reference into Part III of this Report. PART I Item 1. Description Of Business General Pacific Century Financial Corporation (Pacific Century) is a Delaware corporation and a bank holding company. Pacific Century was incorporated in Hawaii in 1971 and in April 1998, changed its state of incorporation to Delaware. Through its banking subsidiaries, Pacific Century provides a diversified range of banking financial services and products primarily in Hawaii and also in the South and West Pacific, and selected international markets in Asia, California and Arizona. Additional subsidiaries are engaged in various businesses, including consumer finance, equipment leasing, insurance and insurance agency services, securities brokerage and investment services and other activities. Pacific Century’s principal banking subsidiary is Bank of Hawaii. Pacific Century also owns Pacific Century Bank, N.A. (‘‘PCB’’) and First Savings and Loan Association of America. Through its subsidiaries, Pacific Century also owns the following foreign financial institutions (in the percentages indicated): Bank of Hawaii-Nouvelle Cale´donie—96%; Bank of Hawaii (PNG) Ltd.—100%; Banque de Tahiti— 95%; Banque d’Hawaii (Vanuatu), Ltd.—100%; and National Bank of Solomon Islands—51%. Pacific Century groups its principal revenue-producing businesses into the following four market regions: Hawaii, Pacific, Asia, and U.S. Mainland. For additional information about Pacific Century and its operations see the Business Segments discussion and Note Q in the Consolidated Financial Statements of this report. Disposition Activity In December 2000, Bank of Hawaii entered into a definitive agreement to sell its credit card portfolio to American Express Centurion Bank. The sale is expected to close in the first or second quarter of 2001. In December 2000, Pacific Century Bank, N.A. entered into a definitive agreement to sell its branch operations in Arizona. The transaction represents approximately $228 million in assets and $415 million in deposits as of December 31, 2000. Pacific Century expects to close the transaction in the first half of 2001. In December 2000, investments in Pacific Commercial Bank in Samoa (43% interest) and the Bank of Tonga (30% interest) were sold to another shareholder of these two banks. Bank Subsidiaries Bank of Hawaii was organized under the laws of Hawaii on December 17, 1897. Its headquarters are in Honolulu, Hawaii, and its deposits are insured by the Federal Deposit Insurance Corporation (FDIC). It is not a member of the Federal Reserve System. Bank of Hawaii is the largest full-service financial institution headquartered in the State of Hawaii with a statewide network of 76 traditional and in-store branches. Bank of Hawaii provides customary commercial banking services through branch offices, representative offices or subsidiary banks in Hawaii, the South and West Pacific and selected international markets in Asia. Pacific Century Bank, N.A. (PCB) is headquartered in Encino, California, and its business primarily consists of providing commercial banking products and services in Southern California and the State of Arizona. PCB is a national bank organized under the laws of the United States. It is a member of the Federal Reserve System and its deposits are insured by the FDIC. PCB’s operations are conducted through 19 branch offices in the State of California and 9 branch offices in the State of Arizona. As discussed above, in December 2000 PCB entered into a definitive agreement to sell its branch operations in Arizona. First Savings and Loan Association of America is located in the territory of Guam. It provides retail financial services through 6 branches. 2 Regulation and Competition Effect of Governmental Policies The earnings of Pacific Century and its principal subsidiaries are affected not only by general economic conditions, both domestically and internationally, but also by the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve System, and foreign governments and their agencies. The monetary policies of the Federal Reserve System influence to a significant extent the overall growth of loans, investments, and deposits; and the level of interest rates earned on assets and paid for liabilities. The nature and impact of future changes in monetary policies are often not predictable. Competition Pacific Century and its subsidiaries are subject to substantial competition in all aspects of the businesses in which they engage from banks (both domestic and foreign), savings associations, credit unions, mortgage companies, finance companies, mutual funds, brokerage firms, insurance companies and other providers of financial services. Pacific Century also competes with certain non-financial institutions and governmental entities that offer financial products and services. Many of Pacific Century’s competitors are not subject to the same level of extensive regulations and oversight that are required of banks and bank holding companies. Effective March 13, 2000, securities firms and insurance companies that elect to become financial holding companies may acquire banks and other financial institutions. This may materially change the competitive environment in which Pacific Century and its subsidiaries conduct business. Supervision and Regulation General Pacific Century is registered as a bank holding company (BHC) under the Bank Holding Company Act of 1956, as amended (the BHC Act) and is subject to the supervision of and to examinations by the Board of Governors of the Federal Reserve System (FRB). Pacific Century is also registered as a bank holding company under the Hawaii Code of Financial Institutions (the Code) and is subject to the registration, reporting, and examination requirements of the Code. In September 2000, Pacific Century entered into a Memorandum of Understanding with regulatory authorities in which it agreed to take certain actions to strengthen and maintain its operations and financial position. See further discussion in the Management Discussion and Analysis of Financial Conditions and Results of Operations section of the report, and Notes F, G, and H to the Consolidated Financial Statements. The BHC Act prohibits, with certain exceptions, a BHC from acquiring beneficial ownership or control of more than 5% of the voting shares of any company, including a bank, without the FRB’s prior approval and from engaging in any activity other than those of banking, managing or controlling banks or other subsidiaries authorized under the BHC Act, or furnishing services to or performing services for its subsidiaries. Among the permitted activities is the ownership of shares of any company the activities of which the FRB determines to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Subject to certain limits, under the Riegle-Neal Interstate Banking and Branching Efficiency Act (Riegle- Neal Act) an adequately capitalized and adequately managed BHC may acquire control of banks in any state. An interstate acquisition may not be approved if immediately following the acquisition the BHC would control 30 percent or more of the total FDIC-insured deposits in that state (or such lesser or greater amount set by the state), unless the acquisition is the BHC’s initial entry into the state. An adequately capitalized and adequately managed bank may apply for permission to merge with an out-of-state bank and convert all branches of both parties into branches of a single bank. An interstate bank merger may not be approved, if immediately following the acquisition, the acquirer would control 30 percent or more of the total FDIC-insured deposits in that state (or 3 such lesser or greater amount set by the state), unless the acquisition is the acquirer’s initial entry into the state. Banks are also permitted to open newly established branches in any state in which it does not already have banking branches if such state enacts a law permitting such de novo branching.